3 Dividend Stocks to Buy Before Rising 243%, According to Select Wall Street Analysts

The popularity of stock splits has seen a resurgence in recent years. While the procedure was common in the 1990s, it almost faded into obscurity before enjoying a revival in the last decade. Companies will normally embark on a stock split after years of strong operating and financial results have driven the share price higher. The prospect of a stock split is generally a reason for investors to take a fresh look at the company in question—and with good reason.

The strong business performance that ultimately led to the stock split is likely to continue, fueling further gains. Research shows that companies that initiate a stock split typically return 25%, on average, in the year following the announcement, compared to average increases of 12% for S&P 500according to data compiled by Bank of America analyst Jared Woodard.

Here are three stocks broken down into stocks that still have a long way to go, according to select Wall Street analysts.

Nvidia: an implied 82% advantage

The first stock to split with lots of upside potential is Nvidia (NASDAQ: NVDA). The company has become the de facto standard bearer for recent advances in artificial intelligence (AI) thanks to its pioneering work with graphics processing units (GPUs).

It turns out that the same chips that revolutionized the gaming industry work just as well at accelerating data over the air, making them the first choice among cloud computing and data center operators. It also speeds up the processing of AI models, which has helped Nvidia become the gold standard for generative AI.

For the second fiscal quarter 2025 (ended July 28), Nvidia generated record quarterly revenue, which rose 122% year-over-year to $30 billion, delivering diluted earnings per share (EPS) that rose 168% to $0.67. The headliner was a strong performance from the company’s data center segment — which includes AI chips — as sales rose to $26.3 billion, up 154 ​​percent.

The rise of AI has fueled a meteoric rise in Nvidia’s stock price, which has gained 716% since the start of 2023 and led to its viral 10-for-1 stock split in June. The stock has experienced a lull in recent months as investors have questioned the resilience of one of the market’s top performers, but many on Wall Street believe AI adoption is just beginning, a trend that favors Nvidia.

In an interview with CNBC earlier this month, Niles Investment Management founder Dan Niles said he “strongly believes” that over the next few years, Nvidia’s revenue and the share price will double from current levels, driven by AI demand. That suggests potential gains for investors of 82% from Wednesday’s closing price.

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He’s not the only one who thinks the future is bright. Of the 60 analysts who covered the stock in August, 55 rated the stock a buy or strong buy, and none recommended sale.

I’ve made no secret of my bullish take on Nvidia, predicting the stock will top $200 by 2026 — and I stand by that prediction.

Nvidia stock is currently trading at 39 times forward sales. While that might seem lofty at first glance, consider this: Wall Street expects the company’s profits to grow 53% on average over the next five years, showing that Nvidia stock is worth a premium.

Sirius XM Holdings: Up 179% Implied

The second division of stocks with significant growth potential is Sirius XM Holdings (NASDAQ: SIRI). The company is second to none when it comes to satellite radio services in North America. Sirius has 34 million paying subscribers, and its audience grows to 150 million, including its ad-supported music streaming service Pandora, so its listener base is unmatched.

The high levels of inflation that have marked the last two years have forced people to make difficult choices with their disposable income, and some have chosen not to renew their Sirius subscription. That, combined with fundamental investor misunderstanding of its recent merger and resulting reverse stock split, has helped send the stock down 56% so far this year. Although the results were weak, the drop in the share price is clearly an overreaction.

In Q2, Sirius’ revenue fell 3% year-over-year to $2.18 billion, while EPS of $0.08 was flat. While paid subscribers were down 100,000 (or about 1.5%), this was an improvement as the churn rate continues to slow ahead of an expected recovery.

Despite the share price weakness, some on Wall Street believe the sell-off was overdone. Reference analyst Matthew Harrigan is one such analyst. He maintains a buy rating on Sirius XM with an adjusted price target of $65. This represents a potential upside of 179% from Wednesday’s closing price. The analyst cites a “market dislocation” due to the recent merger with Sirius XM’s Liberty tracking stock. He also believes management’s “strategic initiatives” will pay off.

Additionally, the declining share price offers savvy investors a compelling valuation. Sirius XM currently sells for about 7 times earnings, which suggests little to no growth going forward.

I think the analyst’s view is spot on, as improving macroeconomic conditions should reignite Sirius XM’s growth, which is likely to drive the stock higher.

Super Micro Computer: Default Supplement 243%

The last company in our trio of stock splits with room to run is Super Micro Computer (NASDAQ: SMCI)commonly called Supermicro. The company has been designing custom servers for more than 30 years, and the accelerated adoption of AI has taken demand to the next level.

The secret to the company’s success is the block architecture of Supermicro’s rack-scale servers. This allows customers to design a system that meets their specific needs. Additionally, the company is the dominant supplier of Direct Liquid Cooled (DLC) servers, which have become almost staples in the era of AI-centric data centers. CEO Charles Liang suggests that Supermicro’s DLC market share is currently between 70% and 80%.

In the company’s fiscal fourth quarter 2024 (ended June 30), Supermicro reported record revenue that rose 143% year-over-year to $5.3 billion, which also rose 38% sequentially. The resulting adjusted EPS rose 78% to $6.25.

Investors sold the stock following the report as concerns about the company’s shrinking profit margin sparked a backlash. Liang said a change in product mix caused by component bottlenecks is to blame, a situation that should be rectified soon.

Supermicro’s record of strong results has pushed its share price 432% since strong demand for AI-centric systems began in early 2023. That prompted the company to initiate a 10-for-1 stock split early last month.

Loop Capital analyst Ananda Baruah maintains a buy rating on the stock and a $1,500 price target. This represents a potential upside of 243% from Wednesday’s closing price.

The analyst is optimistic about Supermicro’s place in the AI ​​server market, citing its leadership when it comes to scale and complexity. He calculates that the company’s sales will accelerate to a run rate of $40 billion by the end of fiscal 2026, extending management’s guidance for revenue of $28 billion in fiscal 2025.

I think the analyst hit the nail on the head as Supermicro continues to gain market share at the expense of its rivals.

Many on Wall Street agree. Of the 18 analysts who provided an opinion in August, nine rated the stock a buy or strong buy and none recommended a sell.

Plus, at 22 times earnings and less than two times sales, Supermicro is the very definition of an attractively priced stock.

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Bank of America is an advertising partner of The Ascent, a Motley Fool company. Danny Vena has positions in Nvidia and Super Micro Computer. The Motley Fool has positions in and recommends Bank of America and Nvidia. The Motley Fool has a disclosure policy.

3 Dividend Stocks You Need to Buy Before They Soar 243%, According to Select Wall Street Analysts was originally published by The Motley Fool